Week in Review: Mixed Data as S&P500 Regains Bull Market Status

On Thursday, the S&P500 index experienced a significant development as it entered a bull market. The broad equities benchmark demonstrated a 0.6% increase, concluding the day at 4,292.93 points. This surge represents a notable 20% leap from its lowest point on October 12, 2022, when it stood at 3,577.03 points. Investors reacted favourably to indications from the Central Bank, which suggested that it is nearing the conclusion of its interest rate hiking cycle. Last week, the Federal Reserve hinted that it is likely to abstain from implementing a rate hike during its June 13-14 meeting. This anticipated pause has acted as a catalyst, propelling stock prices to higher levels.

On Thursday, the US Labour Department reported that weekly jobless claims had unexpectedly increased this week to 261,000, well above expectations and the highest level since October 2021.

Economists at the World Bank have revised their global GDP forecast for 2023, increasing it from the earlier projection of 1.7% to 2.1%. This upward adjustment indicates an improvement; however, it also suggests a significant deceleration compared to the 3.1% growth rate observed in 2022. In addition, the World Bank has reduced its growth outlook for 2024 from 2.7% to 2.4%.

While major economies have exhibited more resilience than anticipated in 2023, the economists caution that the impact of higher interest rates and tighter credit conditions will likely dampen growth in 2024. These factors are expected to take a toll on economic expansion going forward.During a meeting at the White House, US President Joe Biden and UK Prime Minister Rishi Sunak reached an agreement to initiate negotiations on a trade pact between their countries. This trade agreement holds the potential to benefit British automakers by allowing them to qualify for electric car subsidies. Furthermore, it could facilitate the joint development of advanced weaponry. The focus of the trade discussions would revolve around critical materials that play a vital role in the production of batteries used in electric vehicles. The proposed trade package aims to foster collaboration and strengthen economic ties between the US and UK.

According to revised GDP data, the Eurozone’s economy experienced a technical recession during the winter period, albeit by a small margin. The data reveals that the economy contracted by 0.1% in both the fourth quarter of 2022 and the first quarter of this year. This weak growth performance is not unexpected, considering the significant impact of the war in Ukraine on European energy markets.

In Japan, revised figures released this week by the Cabinet Office indicates that the economy experienced stronger growth than initially estimated during the first quarter of 2023. Gross domestic product (GDP) expanded at an annualized rate of 2.7% quarter on quarter, surpassing the initial reading of 1.6% and exceeding economists’ forecasts. The upward revision of first-quarter GDP can be largely attributed to robust corporate investment. Despite apprehensions surrounding a slowdown in global growth, particularly in China, businesses in Japan demonstrated increased spending as sentiment remained resilient.

Saudi Arabia has announced its intention to implement an additional reduction of 1 million barrels per day in oil supply during July. This decision has been prompted by a decline in crude prices and will bring the country’s production to its lowest level in several years. Despite the potential consequences, this bold step has been taken by Saudi Arabia, which holds significant importance as a member of the OPEC+ coalition, with the aim of stabilizing the market.

However, it is important to note that this move does involve some concessions to key allies. Russia, a prominent member of the coalition, has not committed to further output cuts. Additionally, the United Arab Emirates (UAE) has negotiated a higher production quota for the year 2024. Despite these compromises, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, has expressed a strong commitment to taking whatever measures are necessary to restore stability to the market. Brent Crude Oil closed the week lower, down 1.65% to $74,94 bbl.

Chinese equities ended the week on a mixed note, following the release of the latest inflation data, which has increased concerns surrounding the post-pandemic recovery, China’s CPI rose 0.2% in May.  The recent release of weak export and import data has fuelled expectations for increased economic stimulus in China. The data indicates that both domestic and international demand remain subdued. In May, exports experienced a significant decline of 7.5% compared to the previous year, surpassing initial forecasts for a weaker performance. Additionally, imports fell by 4.5% compared to the same period last year. Notably, China’s share of US goods imports in April reached its lowest level since 2006, as reported by The Wall Street Journal. Analysts are concerned that exports may further decline, despite their current elevation compared to pre-COVID levels.

The Shanghai Composite index posted a modest gain of 0.04% for the week, while Hong Kong’s Hang Seng Index extended the previous week’s gains, posting a strong 2.32% week-on-week return.

US stocks ended the week slightly higher, with the S&P 500 up 0.39%, the Dow Jones Industrial Average up 0.34%, and the tech heavy Nasdaq Composite rising slightly 0.14%. The Euro Stoxx 50 ended the weak lower (-0.78%), while the FTSE 100 (0.96%) closed the week in positive territory. Japan’s Nikkei 225 index gained 2.35% this week, continuing its positive trend for the year (23.65% YTD).

Market Moves of the Week:

On the domestic front, recent economic data indicates a notable resilience, as the South African economy narrowly averted a recession during the first quarter. According to the latest data released on Tuesday, the economy expanded by 0.4%, effectively returning to pre-COVID levels. Out of the ten industries monitored by Stats SA, eight experienced growth in Q1, with manufacturing and finance, real estate, and business services making the most significant positive contributions.

Furthermore, South Africa’s current account deficit exhibited a substantial narrowing, declining from 2.3% of GDP in Q4 2022 to 1.0% of GDP in Q1 2023, contrary to the consensus forecast of a widening deficit. The primary catalyst for this improvement was the balance of trade in goods and services, which shifted from a deficit of 0.8% of GDP in Q4 to a surplus of 0.6% of GDP in Q1.

Adding to the positive developments, there has been some relief from Stage 6 national loadshedding, and a constructive meeting between government officials and business leaders on Wednesday, which has reignited optimism that a potential solution could be identified to mitigate the persistent power outages.

Although there were some positive developments on the news and economic front, the JSE ALSI posted a modest decline for the week (-0.25%), the only positive sector contributor was Financials up 7.25%. Both Industrials (-1.95%) and Resources (-2.71%) were down for the week. The Rand made a strong recovery, receding below the R19/$ mark. The currency was trading at R18.72/$ by Friday close, appreciating 3.99% against the Dollar. The SA listed property sector continues to face headwinds, the sector closed the week marginally lower -0.15%.

Chart of the Week:

In May 2023, the European Union’s transition to clean energy reached a remarkable milestone. Solar panel generation exceeded the bloc’s coal power plants for the first time, production should be further boosted over the summer months. Power prices turned negative during some of May’s sunniest days as grid operators struggled to handle the surge. Source: Ember & Bloomberg.

The Living Relay

In looking back at photos of my life it quickly dawns on me that life is not a picture, it’s a movie. We get bigger, older, wiser, richer (or poorer!). We lose loved ones, and we gain friends. We have kids and grandkids, and our kids and grandkids lose parents and grandparents. This happens to everyone all over the world all the time. We live in constant momentum.

In the financial universe, there are two interesting sets of momentum. One is pretty obvious and in theory easy to manage; the other is less obvious and as a result, more difficult to get right.

Finding Financial Independence

The first is our own personal financial growth. Most people aspire to reach financial independence. That means having enough to enable us to work because we want to, not because we have to. To reach this point we undertake a journey of labour and savings illustrated by the graph below. The money we need to see us through our life at any given point in time is depicted by line A. The savings we have accumulated at any point in time to match that need is typically depicted by line B.

Becoming financially independent is determined by our aggregate spending throughout our life rather than our earnings. Both are needed, but it is the spending side that determines how hard we need to work and for how long. The higher our standard of living, the longer it takes to be financially independent and the more we need to reach that point. Wealth, therefore, is an entirely bespoke concept. The fact that we are living longer also means that we will have to either work for longer, work harder or spend less. Any of the three will do the trick, not much else.

This is pure maths and maths is not a guessing game. It just needs honest soul searching and a calculator.

Generational Momentum

The second is less obvious and concerns the interdependent nature of succeeding generations on each other. This is life’s relay. It’s a relay where the older generation runs towards the younger generation in a never-ending race. The baton refers to the assets each generation accumulates. Understanding the rules that govern this relay is crucial if one wants to hand over the baton successfully and maintain the momentum already generated. Here are the four simple rules:

Rule No. 1: It’s a Relay

The participants must understand they are in a relay. This means a high degree of communication and mutual acceptance that at some point in time the baton will pass on. This is especially important for family businesses – the sooner one addresses succession the better.

Rule no 2: let go and take

The giver must be willing to let go, and the receiver must be willing to accept. Clinging onto the baton or having a clenched fist does not make for a smooth handover. A control-obsessed person, for instance, can cause a scarcity mentality among heirs. This typically results in squandering through overindulgence or stubbornness – insistence that they don’t need anything and can do it on their own. Don’t live like you are poor when you are not. Wealth does not spoil kids; a lack of insight and understanding of wealth and the virtue of labour does. Accepting a baton means accepting the responsibility for the momentum as well.

Rule no 3: mentoring

The receiver must be trained to be in motion, ready for the handover to happen efficiently. The baton will either be dropped or the runner will overrun the receiver if the receiver stands still or is unprepared. To be able to carry inherited wealth, coaching and participation are needed. Simple things like having your children understand your monthly expenses and income and understanding the wealth that has been accumulated are steps in the right direction. Don’t dump wealth on people who do not have insight into it and don’t ever skip generations. Take responsibility for one generation at a time. Prepare them well and allow them to sort the next generation out.

Rule no 4: Don’t look back

The receiver must run forward and look towards the next generation. Issues of neglect or distant relationships can cause heirs to look back, which can negatively affect the passing of the baton. The sins of the father will last two generations, won’t they? You can’t change the past, but you can learn from it to create a better future.

In Summary…

We all constantly move along this financial continuum. One journey is mostly on our own and the other within the sphere of succeeding generations, but both are of equal importance. Understanding the rules of each journey will create a harmonious relationship with wealth within our own lifetime and a positive momentum for future generations.

Keep in mind that the baton contains much more than worldly goods and money. The rules governing generational momentum is true for everything we pass on to our heirs. Of all things, kindness is most probably the most valuable asset in that baton. Imagine a world where that happens as a rule rather than an exception.

Written by Louis Venter, Fiduciary Specialist at Carrick Consult.

Week in Review: US Inflation Cools

Major US indices ended the week higher on the back of encouraging signs that inflation pressures are continuing to recede. The Labor Department’s Wednesday morning release of the consumer price index (CPI) showed that CPI rose 0.1% for the month of March against a Dow Jones estimate for 0.2%, bringing the year over year inflation rate to 5%. The slowest pace since May 2021. Excluding food and energy, the core CPI accelerated 0.4% and 5.6%, both as expected.

Minutes released on Wednesday of the Federal Reserve’s March 21-22 meeting revealed that the central bank is now forecasting a “mild recession” later this year bought on in part by the recent banking turmoil that saw the collapse of Silicon Valley Bank and Signature Bank. Officials indicated they will closely monitor the tightening of credit conditions. The expectation being that the more credit tightens, the less the Fed will need to hike rates. Projections following the meeting indicated that Fed officials expect gross domestic product growth of just 0.4% for all of 2023.

In other economic news, the Producer Price Index fell by 0.5% MoM in March, the biggest monthly decline since April 2020, and rose by 2.7% YoY after increasing by 4.9% YoY in February. US retail sales also came in softer, dropping 1% in March from February, a sharper decline than the 0.2% fall in the previous month. The downtrend in retail sales and slowing producer prices adds further evidence that the economy is slowing as consumers reduce spending as prices remain high.

The U.S. corporate earnings reporting season got off to a good start this week with large U.S. banks reporting robust first quarterly performance.  JPMorgan shares ended 7.6% higher on Friday after the U.S. largest bank by assets, said its first-quarter profit rose to $12.62 billion, or $4.10 a share, from $8.28 billion, or $2.63 a share, in the year-ago quarter. Wells Fargo and Citigroup also topped analyst estimates for revenue Friday. Still ahead are Goldman Sachs and Bank of America results on Tuesday, while Morgan Stanley discloses earnings Wednesday.

For the week, the Dow booked four consecutive weeks of gains, while the broad-market S&P 500 gained 0.79% and the Nasdaq advanced 0.29%.

Stocks in Europe rose for the week as recession fears waned. In local currency terms, the pan-European STOXX Europe 50 Index advanced 1.89% while the UK’s FTSE 100 Index climbed 1.68%.

In Asia, Japanese equities gained over the week, with the Nikkei 225 Index rising 3.54%. The market was buoyed by New Bank of Japan Governor Kazuo Ueda who said that it is appropriate to keep the central bank’s loose monetary policies in place for now. In China, stocks were mixed after a volatile week as softer-than-expected inflation dampened investor sentiment.

Market Moves of the Week:

The International Monetary Fund (IMF) has warned that South Africa’s fiscal metrics could deteriorate further in the medium term than initially forecast amid high inflation, rising borrowing costs, a weaker growth outlook and elevated financial risks, in its Fiscal Monitor Report released this week. Amidst an increase in rolling power cuts, the IMF cut its 2023 growth forecast to slight growth of 0.1%.

South African Finance Minister Enoch Godongwana who is attending the IMF and World Bank spring meetings in Washington ruled out a recession for South Africa this year despite the gloomy IMF forecast.

On the Johannesburg Stock Exchange, the JSE All Share index ended the week firmer on Friday, the benchmark index gained 2,28% over the week, with strong gains across the major sectors.

Meanwhile, the rand also ended the week firmer at R18.08 to the US dollar, after trading above the R18.50/$1 level earlier in the week, dragged weaker by the International Monetary Fund (IMF) lowering South Africa’s growth forecasts and heightened load shedding.

Chart of the Week:

The consumer price index, a widely followed measure of the costs for goods and services in the U.S. economy, rose 5% from a year ago versus the estimate of 5.1%. The data showed that while inflation is still well above the Fed target rate, it is showing continuing signs of decelerating.

Week in Review: Banking Turmoil Rattles Markets

The failure of Silicon Valley Bank (SVB) last Friday set off a wave of investor fears that further collapses in banks would follow. Another large regional bank, New York’s Signature Bank, which had heavy exposure to cryptocurrency markets, then also collapsed last weekend. However, on Sunday, March 12, the Federal Reserve (the Fed), the Federal Deposit Insurance Corporation (FDIC), and the Treasury Department made an announcement that all depositors of SVB would be granted complete access to their funds on Monday morning. Additionally, the Fed made more funding available to banks to protect deposits and prepared for addressing any potential liquidity issues. Nearly $143 billion in additional funds were loaned to the FDIC to backstop the failed SVB and Signature Bank.

The Fed’s additional funding proposed last Sunday came in the form of the Bank Term Funding Program, which was created to support American businesses and households by making additional funding available to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. Since last Sunday, U.S. banks have borrowed $11.9 billion from the Bank Term Funding Program. Through this program, banks are able to obtain one-year loans with favourable conditions in return for providing collateral of high quality. All the emergency lending resulted in a total of $303 billion being added to the Fed’s balance sheet, which counteracted a significant portion of the quantitative tightening that the Fed had initiated since June.

Later in the week, U.S. bank First Republic, which had a focus on the tech sector similar to SVB, came under pressure after investors saw similarities between First Republic and the failed Silicon Valley Bank. A rescue plan was coordinated and on Thursday morning, First Republic, the 14th-largest bank in the country, received a cash infusion from 11 rivals, including America’s largest lenders. The rescue plan detailed that the group of banks would deposit $30 billion with First Republic for an initial period of 120 days, in an effort to calm fears about its balance sheet. In recent days, regional banks have experienced significant outflows of deposits, as customers have been transferring their funds to the large banks that are involved in the rescue efforts.

Hopes that the Fed might adjust its monetary policy in response to the banking sector events seemed to drive a rally during the week. By the end of the week, futures markets were pricing in zero likelihood of a 50 basis point hike by the Fed in March compared with a 40% chance of one the week before. Markets were also placing a nearly 99% probability that the federal funds target rate would end the year lower than its current range of 4.50% to 4.75%. In other news, U.S. inflation moderated in February, rising 6% y/y, in-line with expectations, down from 6.4% y/y in January, while core inflation declined to 5.5% from 5.6% in the month before.

Shares of Credit Suisse, the Switzerland-based financial giant, sold off after the chair of Saudi National Bank, its largest shareholder, announced that it would not invest further capital in the company. This event occurred shortly after Credit Suisse postponed the publication of its annual report due to the presence of “material weaknesses” in its controls for financial reporting. Following a steep drop in the value of Credit Suisse’s shares, the Swiss National Bank (SNB) offered a credit line of CHF 50 billion ($54 billion) to the bank on Wednesday evening, which provided temporary support to the stock price. Multiple sources have reported that UBS is currently in talks to acquire either all or a portion of Credit Suisse. The boards of the two largest banks in Switzerland are expected to convene separately over the weekend to examine what could potentially be the most significant banking merger in Europe since the financial crisis.

On Thursday, the European Central Bank (ECB) raised its benchmark rate by 50 basis points, to 3% from 2.5%. The ECB reiterated that future decisions would be data dependent but offered no forward guidance, while stating that “the euro area banking sector is resilient, with strong capital and liquidity positions.”

In an effort to enhance liquidity and stimulate the economy, the People’s Bank of China (PBOC) announced its decision to lower the reserve requirement ratio (RRR) for most banks by 25 basis points. This was the first such reduction made by the central bank this year.

On the market front, U.S. stocks closed mixed for the week on the back of turmoil in the banking sector, concerns over a steeper slowdown in the economy and hopes that the Fed would now be forced to pause its rate-hiking cycle. The S&P 500 gained +1.34% over the week, with cash-flush, mega-cap tech stocks recording robust gains while energy and financial shares slumped. As a result, the Nasdaq rallied +4.41% while the Dow Jones ended the week -0.15% lower.

Shares in Europe (Euro Stoxx 50) declined -3.89%, while the FTSE 100 sunk -5.33%. Chinese stocks (Shanghai +0.63%) managed a slight gain while, in Japan, the Nikkei 225 fell -2.88%. Gold (+6.50%) rallied, benefiting from risk-off sentiment, while Brent Oil fell -12.29% over the week.

Market Moves of the Week:

In South Africa (SA) this week, fresh economic data prints surprised to the upside, although still painted a gloomy picture for the SA economy. Data released on Thursday showed that SA retail sales dropped by -0.8% y/y in January, compared to  a -0.5% y/y decline in December. A look into the data shows that households cut their spending on essential food and beverages (-7.3% y/y) due to heightened living costs, but increased spending on clothing and footwear (+2.3% y/y).

Mining and manufacturing production was also released for January. Mining production shrank by -1.9% y/y , following December’s -3.6% y/y drop. The print was however stronger than the market expected (-2.8% y/y). On the manufacturing front, January production slipped -3.7% y/y (consensus -5.2% y/y) from -4.5% y/y in December. Persistent, heightened load shedding continues to remain a key downside risk to the energy intensive manufacturing sector. In January, there was an -8.0% y/y decrease in electricity production and a -7.3% y/y decrease in electricity consumption, with Eskom’s Energy Availability Factor (EAF) below 55.

Shares of Transaction Capital tumbled this week (-59.86% w/w) following a gloomy trading update that was released on Monday. The company posted a trading update reporting it expects core earnings per share from continuing operations in the half-year to end-March to fall between 20% and 50%. The group said on Monday that some of its operations were being badly impacted by macroeconomic headwinds.

On the mining front, Gold Fields (+23.46% w/w) and AngloGold Ashanti (17.90% w/w) announced on Thursday that they have agreed on the key terms of a proposed joint venture in Ghana, which would create the largest gold mine in Africa.

The JSE All-Share index fell -5.14% over the week, with Financials taking the biggest hit, down -6.91% w/w. The rand depreciated against the U.S dollar this week to end at $/R 18.47.

Chart of the Week:

Last week Powell signalled the central bank might accelerate its interest-rate-hike campaign in the face of persistent inflation. Traders moved to price in a half-point hike in the benchmark interest rate at the Fed’s March meeting, and further rate hikes beyond. Traders now see next week’s Fed meeting as a tossup between a smaller quarter-point hike and a pause, with rate cuts seen likely in following months. Source: Reuters

Week in Review: US Inflation Falls

In June, spending at US retailers continued its positive growth trend for the third consecutive month, showcasing resilience among American consumers. According to the Commerce Department’s report on…

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Embracing Your Simplexity

Beautiful Lorelei

In life, very few things are simple. Simplicity fools us and taunts us as we stumble through a complex world. Simplicity is the irresistible Lorelei enchantingly singing to us from the shore across the river. The Lorelei that will look on uncompassionately as our boats crash against the rocks as we try to reach simplicity that lies on the other side of complexity.

Jeffrey Kluger beautifully illustrates how simplicity misleads us on so many fronts in our modern lives in his book Simplexity – the simple rules of a complex world – and invites us to consider a different approach – Simplexity.

I echo his plea from my area of specialisation.

The Modern Fallacy

There seems to be a growing chorus of financial and fiduciary service providers enchanting the masses to solve all their estate planning issues by simply doing a will. Don’t get me wrong, having a will is important and reviewing your will should be a two-yearly habit. Some wills are very simple and there is no need for massive estate planning to be done.

But this is where simplicity fools us.

Any will that is drafted for any person should be the result of some form of estate planning. Estate planning can only be done if you understand the data that underpins your planning and the legal environment in which you live, or in which the assets exist.

The will itself, is the final step of a planning process and the fact that the will is simple means that the complexity has been absorbed to find the simple answer or the simple will at the other end of complexity.

Data Matters

All estate planning processes should start with knowing what you own and who you owe. This is critical in understanding what you will leave behind and what is available to distribute to heirs. For example:

  • Debt is repaid before we even consider your bequests.
  • Debt could include loans being called up for you stood surety.
  • Obligations like estate duty, income tax, capital gains tax, administration costs and transfer duty are also payable before the heirs receive their inheritance.
  • Your marital obligations rank higher than the rights of your heirs.
  • Maintenance claims also trumps bequests.

Considering these data-points and collating the information will have greater value in the process of transferring your wealth than a “simple” will.

A will that does not consider these data points is worse than dying intestate (which means – without a will). In other words, a will that is badly drafted or drafted without considering the assets, liabilities and obligations is worse than not having one.

Planning Matters More

The will you sign is the final step of a planning process. In this planning process you (or your advisor) should not guess the law, nor guess the maths.

In our environment we collate all the data points, map them in our software and then do proper planning based on the data that have been provided. This allows us to simulate the death scenarios and put the will to the test. It also allows us to amend the plan as the data changes over time.

Peace of mind lies in the fact that someone has recorded the data points, knows where everything is and will be able to execute the wishes in the will easily and effectively. More than 90% of delays in the administration of a deceased estates are avoidable by collating the data and basing the planning on the data.

Execution Follows

The execution of the planning is only the third step in the process. This is where the will drafting comes in. If you find simplicity at this juncture – great. If not, we might have to absorb some more complexity.

 

A few things come to mind that require more planning:
 

  • Liquidity shortfalls in the estate. If there is not enough cash to pay what needs to be paid, assets that were planned to go to legatees might have to be sold. This is obviously a problem that requires a solution. The solution is not always taking our more life cover – its only one option and then the life cover should be taken out correctly.
  • Exposure to death taxes and taxes on death sometimes create the liquidity problem but could be avoided through the diligent use of trusts. Execution of the plan therefore might include creating a trust.
  • Assets located in other countries might require a deeper dive into the legal environment of those jurisdictions. In some cases, a second will might be required or the structure in which the asset is held might have to be changed.
  • Heirs who are minors or who live in other countries often requires special planning. For minors you need to have a clear understanding about their personal well being (who they will stay with) and their financial well-being (who will look after their money). The age and the whereabouts of heirs are important data points.

Adaptation Should be a Constant

The fact that things around us are in a constant state of change, is a complication. A plan or a will that works today, might not work in three years’ time. There are so many data points that change over time:

  • We buy assets and we sell assets.
  • We repay debts or make additional debts.
  • Heirs pass away and heirs are born.
  • Minor children become majors.
  • People become independent from us or become dependent on us.
  • We divorce and remarry or get married.
  • Tax law and taxation rates change.
  • We change advisors, or advisors move on to other businesses.

By pinning down the data-points, we will become aware of what is changing. By knowing what is changing we will be drawn into reviewing the plans. Reviewing the plans would result in updating that simple will to another simple will that now reads slightly differently.

Let’s rather find the simplicity at the other end of complexity together. Let’s embrace our simplexity and shield our ears from the enchantment of the simplicity industry.

Written by Louis Venter, Fiduciary Specialist at Carrick Consult

Carrick Consult is Not Guessing the Maths or the Law

“Failure to plan is planning to fail” is one of those often-repeated phrases one would find in many a financial planning article.  It is true of course, but if you put this dictum to the test in real life, it still is astounding to what extent people in general fail to plan.

The conundrum with estate planning is that even if you plan, the plan is never tested until after death – at which time – if the plan does not work out – there is nothing one can do.

That is simply not good enough either.

 

The Living L&D is an innovative product development that puts a stop to this madness.  Yes, you should plan, but at the same time the plan should be put to the test to ensure that the outcome one had in mind is realised.

Any plan can be tested through a simulation.  Financial planners “test” their plan through a simulation done on an Excel spreadsheet (or some other smart financial tool) to ensure that the growth and risk they propose on an investment achieves the desired investment outcome – one of which is the risk of longevity. 

Carrick Consult has adopted a similar simulation called the Living L&D to not only test any estate plan by simulating the administration process of a deceased estate, but also to manage the plan and the simulation over the lifetime of a client to ensure that the plan changes over time and that the simulation provides certainty that the plan works as it was intended to do.

Enrolling in the Living L&D programme achieves a number of objectives:

  • It provides a precise mathematical visual aid to a client to see for him – or herself the actual result of the estate planning.  One can see exactly who will get what, which assets will be sold and which retained, what the estate duty payable is and whether a liquidity issue exists.
  • It provides an opportunity for the advisor and the client to change the planning and see how the outcomes change.
  • It allows the estate planner to be constantly prepared for the eventuality of death as the greater part of the work that needs to be done after death is already in place.  By running the Living L&D simulation, the actual work required to be done after death is already done.
  • The avoidance of calculation errors and thought errors means that the time it takes to administer such an estate is cut in half.  Most delays in deceased estates could have been avoided through proper planning and proper planning cannot be done without running a simulation or testing the plan.

Guessing either maths or the law is simply crazy.

From this day on, no Carrick client will ever have to guess either.  At Carrick we simply don’t guess maths and we simply don’t guess the law.

To support this drive, Carrick Consult makes use of smart automation to collect the information from its clients and to import each client’s reply into its Living L&D process.  Remediation is done through a team of expert fiduciary advisors, all admitted attorneys, that work alongside the wealth advisors.

In order to encourage this change in estate planning behaviour, all costs incurred in accessing this solution are offset against any future executor’s fee and the level of adoption of the solutions will also give a client an automatic discount of between 30% and 50% of the executor’s fee.

Estate planning is a key building block of financial wellness and will never be done differently again.

Take control and ownership of your estate plan through the Carrick Consult Living L&D.  It’s the best gift you can leave your loved ones.